THE Southern India Mills Association (SIMA) has stated that the prevailing trend in yarn price is on account of the market dynamics and it has nothing to do with cotton yarn exports to China.

The apex textile industry body has termed the recent statement by the Powerloom Development and Export Promotion Council (PDEXCIL) seeking to link both as `not correct'.

The price behaviour of yarn in recent times had been in response to raw cotton price which had gone up by 40 per cent between the beginning of the current season in August-September 2003 and now. But even then, there had been no parity between surge in cotton price and that of yarn whose increase had not kept pace with spiralling raw cotton price. The cotton yarn price had increased only by 19 per cent, the SIMA Chairman, Mr Vijay Venkataswamy, said.

He also refuted the PDEXCIL Chairman, Mr Senthil Kumar's claim that increased yarn export to China from India had led to decreased availability in the local market affecting the domestic industry, especially the weaving industry.

Mr Venkataswamy maintained that as against an export of 65 million kg of yarn shipped out of India to China in 2002 calendar, the total yarn shipment made in 2003 was just 46 mkg. There had been a steady decline in yarn shipment to China from this country since 2000 onwards.

He also objected to a statement by PDEXCIL that the six per cent duty-entitlement passbook (DEPB) rates allowed on yarn exports was a subsidy that hurts the domestic industry. The Government gave it on yarn exports to offset the import duty incidents suffered on inputs used for the exportable items. These include the import duty on cotton, spares and diesel used in the yarn manufacture.

If that was the case, the grey fabrics made by the powerloom industry and exported also enjoyed eight per cent DEPB rate, which can be termed as `subsidy', he added.